Why NLC India Share Price is Rising

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In today's issue, we're going to deep dive into the quarterly earnings of a public sector undertaking (PSU) - NLC India.

NLC India is a power generation and mining company, owned by the Government of India.

At present, a large part of its business comes from power generation (more than 80% of revenues) whereas the balance is from lignite (brown coal) mining.

This mix could change soon as the company is taking several steps to enhance its renewable energy portfolio and also invested in green hydrogen.

On 4 February 2025, NLC India share price rose up to 9% in intraday trade after it posted earnings for the quarter ended December 2024.

Let's take it from the top...

Upbeat Quarterly Earnings

NLC India shares surged following strong Q3FY25 results.

The company's consolidated revenue rose 39% year-on-year (YoY) to Rs 44.1 billion (bn) compared to Rs 31.6 bn posted in the year ago period.

EBITDA more than doubled in Q3FY25, soaring 101% to Rs 18.3 bn against Rs 9.1 bn posted in the same quarter last year.

EBITDA margins also rose to above 40%.

• December 2024 quarter: 41.4%
• December 2023 quarter: 28.6%
• September 2024 quarter: 29.4%

Meanwhile, its net profit more than doubled and shot up by 167% to Rs 6.7 bn.

While declaring the results, the company's board also approved an investment of Rs 11.1 bn in a joint venture with Rajasthan Rajya Vidyut Utpadan Nigam. This investment is aimed at developing lignite-based thermal power stations and lignite mines in Rajasthan.

Nevyeli Uttar Pradesh Power's Ghatampur Thermal Power Plant (GTPP) Unit I (660 MW) successfully commenced commercial operations by which NLC India group's installed power generation capacity increased from 6,071.1 MW to 6,731.1 MW.

So far for the first nine months of FY25, the company has incurred a capex of Rs 52.5 bn.

Interim Dividend Announced

Apart from upbeat quarterly earnings, what excited shareholders more was the dividend announcement.

NLC India declared a dividend of Rs 1.5 per share for FY25, with 7 February 2025 set as the record date and payment due by 4 March 2025.

This dividend announcement indicates that the company is generating sufficient cash flow and profits to share with its shareholders.

When companies announce dividends, their shares usually attract demand from both income-focused investors and those seeking growth. The increased demand can drive up the stock price in anticipation of the dividend payout.

NLC India has a rich history of paying consistent dividends to shareholders.

NLC India Dividend History

Year End	Dividend per Share (Rs)
31-Mar-24	3.0
31-Mar-23	3.5
31-Mar-22	3.0
31-Mar-21	2.5
31-Mar-20	7.1
31-Mar-19	4.5
31-Mar-18	4.5
31-Mar-17	7.3
31-Mar-16	3.0
31-Mar-15	2.8
31-Mar-14	2.8
31-Mar-13	2.8
31-Mar-12	2.8
31-Mar-11	2.3
31-Mar-10	2.0
31-Mar-09	2.0
31-Mar-08	2.0
31-Mar-07	1.2
31-Mar-06	2.0
31-Mar-05	2.0
31-Mar-04	1.4
31-Mar-03	1.4
31-Mar-02	1.4
31-Mar-01	1.0
31-Mar-00	0.7
31-Mar-99	0.5

Source: Equitymaster

What Next?

NLC India could possibly unlock a lot of value with the listing of NLC India Green Energy.

In October 2023, NLC India established a wholly owned subsidiary called NLC India Green Energy (NIGEL).

This subsidiary will be responsible for planning, participating in renewable energy tenders, and executing renewable energy projects.

NIGEL aims to reach a capacity of 5 GW by 2030, contributing significantly to carbon emission reduction efforts.

While the company has not made any official statements regarding an IPO, the possibility of one in the future remains.

Going forward, the company aims to enhance its renewable energy portfolio. It has outlined a massive capex of Rs 827 bn by 2030 to scale up its power generation capacity.

NLC India has already invested in green hydrogen with a pilot project underway. The company has issued a consultancy order to Engineers India for its 4 MW green hydrogen plant.

Between 2020-2024, the company's sales have grown at a CAGR of 6% while net profit has grown at a CAGR of 4%.

Financial Snapshot

Rs m, consolidated	FY20	FY21	FY22	FY23	FY24
Net Sales	103,206	98,461	119,479	161,652	129,990
Growth (%)	-	-5%	21%	35%	-20%
Operating Profit	47,196	47,549	47,609	70,594	44,830
OPM (%)	46%	48%	40%	44%	34%
Net Profit	13,160	13,098	11,613	13,957	18,475
Net Margin (%)	13%	13%	10%	9%	14%
ROE (%)	11.3	10.0	8.1	9.7	11.8
ROCE (%)	9.6	8.8	9.3	8.3	9.8
Dividend (Rs)	7.1	2.5	3.0	3.5	3.0
Debt to Equity (x)	2.1	2.0	1.6	1.5	1.4

Data Source: Equitymaster

Going forward, the company's performance is expected to improve with the company commissioning its thermal power plant on a timely basis.

Nevertheless, investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence.

How NLC India Share Price has Performed Recently

In the past 5 days, NLC India share price is up 9%.

In the past week, it has rallied from Rs 207 to Rs 237 at present.

NLC India has a 52-week high of Rs 312 touched on 16 July 2024 and a 52-week low of Rs 193 touched on 5 June 2024.

In the past 1 year, shares of the company are down 17%.

Here's a table comparing NLC India with its peers -

Comparative Analysis

Company	NLC India	Adani Green	CESC	JSW Energy	PTC India
ROE (%)	11.8	21.1	12.9	8.8	9.5
ROCE (%)	9.8	10.1	12.1	8.8	10.3
Latest EPS (Rs)	16.3	8.6	10.5	10.8	18.8
TTM PE (x)	13.1	112.6	12.8	41.2	7.3
TTM Price to book (x)	1.6	13.9	1.5	2.8	0.8
Dividend yield (%)	1.4	0.0	3.3	0.5	5.7
Industry PE	18.5
Industry PB	2.7

Source: Equitymaster, Ace Equity

To know more about the company, check out its financial factsheet and latest financial results.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...